Pablo Adreani, an Argentinian analyst at AgriPac, a consultancy from Córdoba, affirmed this weekend that the remaning acres that need to be planted in Argentina are threatened by the lack of rain. According to the Buenos Aires Cereal Exchange, soybean sowing reached 53% of the estimated surface and the planting of corn got to 4o% of the projected area. The weather forecast there will be no rain in most Argentinian regions in the last 15 days of December.
“This week, if there is not important rains, there will be only two weeks in which we could plant. This situation is extraordinary and could be a lethal factor to the market”, said Pablo Adreani in his column at Buenos AIres prominent newspaper La Nación. One of the exceptions is the region of Rio Cuarto, Córdoba, which will have some precipitation in the last days of the year, according to the current weather forecast. “We are in a full weather market and, if there no miracle, we will see a brand new situation in the country. Nearly 50% of the hectares planted in the summer are at stake,” reads his column.
Pablo Adreani yet forecasts that there will be a strong volatility in the market in the coming days. “There is no doubt that we will have from now one of the most volatile and extraordinary markets, which would be impossible to foresse prices. While that happens, the farmer continues to be ‘sat’ on soybeans,” said the analyst referring to the 12 million metric tons of soybeans stocks in Argentina. Farmers await for a gradual reduction of soybean taxes in the coming year to sell.
A new report from the Buenos Aires Cereal Exchange reveals that the works of soybean planting advanced 10 percentage points in one week. The total estimated surface to be planted is 44.7 million acres and 53.2% of this area was reached by planters. It is a delay of 4.4 percentage points compared to the previous year crop. In the northeastern parts of the country, the works still lag behind, while the Northwest is about to start.
In the case of corn, planting has reached 40.4% of a surface of 13.3 million acres, while the sunflower planting is about to finish with 98.1% of the total area implemented.
The Monetary Policy Committee of the Brazilian Central Bank had its monthly meeting yesterday and decided to cut interest rates by 0.5 percentage points. The reference rates are now 7% a year and the lowest level in history.
The reduction was the tenth consecutive in the year, after a drastic reduction of inflation. Inflation target was 4% a year, but now the inflation rate is nearly 2.7%. Most analysts already expected the interest rates cut.
The third quarter was not good for Brazilian agriculture, but the accumulated activity shows a growth in 2016. That is what official data revealed yesterday (12.04).
The Brazilian National Institute of Geography and Statistics (IBGE) data says that from July to September there was a 3% retraction of Brazilian agricultural gross domestic product compared to the previous three months. However, if the values are compared to the third quarter of 2016, there was a growth of 9.1%. The Brazilian farm GDP accounted R$ 70.3 billion in the period.
The accumulated value of Brazilian farm products in the first nine months of 2017 was 14.6% higher than the same period of the previous year.
The lower than average rains that are forecast for the first half of December would create difficult to progress with corn and soybean planting in Argentina. After a first half of the year with abundant rains, the spring had low precipitation in the South American country. This weather pattern affects mostly the late-planting fields.
“It is going to rain below the average in this first half of December. It could be very critical for late planting”, said Germán Heinzenknecht, a meteorologist at Climatologia Aplicada consultancy.
The most recent report of the Buenos Aires Cereal Exchange said that the planting advanced to 34% of the surface in the case of soybeans and 35.8% in the case of corn.
International consultancy INTL FCStone released a new projection for the Brazilian grain and oilseeds crop. In the December edition, the consultancy increased the estimate of Brazilian soybean production to 107.6 million metric tons – down from 106.1 million metric tons a month before.
“Planting is about to be finished, but the yield estimates are better than expected with favorable conditions”, said analyst Ana Luiz Lodi.
For summer crop corn, the consultancy estimates a Brazilian production of 23.4 million metric tons because of a smaller planted surface. Corn yields are expected to be also lower. “The shrink will be very significant”, concludes Lodi.
For the second corn crop, an output of 63.5 million metric tons is projected, which would be a fall of 5.8% compared to last year. The window for planting is tight and there is greater climate risk.
The Focus report, published by Brazil’s Central and that gathers estimates from private financial institutions, forecasts that interest rates would be cut in the country twice in a short period of time. The first cut would happen this Wednesday and the rate would 0.5 percentage point to 7%. The second cut would happen just in February of 2018, but the rate would only be cut by 0.25 percentage point.
The new is relevant for the grain market because it affects the competitiveness of Brazil’s Real and the growth of the Brazilian economy, that would be boosted in 2018. Inflation expected for 2017 is 3.06%, while the inflation target was 4.5%.
In an interview with Brazilian portal Notícias Agrícolas, market analyst Matheus Gomes Pereira from AgResource Mercosul said that the forecast for the coming five days in both Brazil and Argentina crops. But after these five days, he highlighted that Argentina will have a scarcity of rains and central parts of Brazil would have favorable weather. In some cases, there are worries about excessive rain.
“A higher probability of La Niña is more imminent to start in December and would extend until February. The worries are not concrete yet because is all about a forecast still”, said Pereira in the interview.
Data released by the Rural Institute of Rio Grande do Sul (Emater/RS) reveals that the planting works in the state of Rio Grande do Sul, the southernmost state of Brazil, reached 98% of the surface in the case of corn and 70% in the case of soybeans. In the cases of corn for human consumption, the sales for the final consumer already started in the state.
The pace of the works was pushed by favorable conditions with rains every week and sunny days. So far, the incidence of diseases is low.
The soybean planting works keep advancing in Uruguay. But several areas of the tiny South American country need more water. Of the 3.2 million acres esimated for early planted soybeans, 2.4 million acres are already planted. According to local analysts, the scenario will be more complicated for soybeans planted in the second window.